Delta Electronics Inc (台達電) yesterday gave a flat outlook for this quarter as it reported a 15.77 percent year-on-year decline in net profit of NT$5.13 billion (US$168.41 million) for the third quarter, resulting in earnings per share of NT$1.97.
The Taipei-based company blamed the decline on its automation segment’s poor performance, which saw operating profit plunge 20 percent year-on-year, and a bumpy takeover of Delta Electronics (Thailand) PCL (泰達電), in which it acquired a 63.78 percent stake in April.
The company’s automation business, which contributed 13 percent to overall revenue last quarter, has hit rock bottom, chairman Yancey Hai (海英俊) said.
“Our industrial automation business depends largely on the China market, as it brings in around half of [the business’] revenue ... however, there are a lot of market uncertainties due to US tariffs,” Hai told investors at an earnings conference in Taipei.
The company is investing heavily in research and development (R&D) in a bid to stay ahead of the competition, Hai said.
Delta put about 8.8 percent of its overall revenue toward R&D last quarter, a 25 percent increase year-on-year, it said.
Third-quarter revenue rose 13.9 percent year-on-year to NT$72.46 billion thanks to strong sales from the power supply segment, which contributed 53 percent to overall sales last quarter and a 23 percent increase in operating profits on an annual basis.
Order visibility for its passive components segment this quarter is good, the company said.
“We are seeing more and more passive components in mobile phones and automobiles ... we can count [on average] more than a dozen in a car,” Hai said.
There was a slight growth in shipments of fans and thermal products this quarter, he said.
However, the company’s infrastructure segment, which contributed 34 percent to overall revenue, is expected to see a decline, with Hai saying he was conservative about its telecom equipment segment.
“The transition from 4G to 5G is proving to be quite complicated,” he said, indicating that telecommunications enterprise clients have struggled to find a balance between a profitable business model and the high initial investment required for 5G deployment.
Sales of electric vehicle components are likely to remain flat this quarter as the market has yet to take off, Hai said.
“Electric vehicles are still too expensive ... there is not yet a complete market infrastructure to secure demand,” Hai said, adding that environmental regulations remain the most important driver in the sector.
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